+12 votes
asked ago in General Economics Questions by (1.3k points)
Is a free-for-all at 11am on a day in early September the optimal mechanism for allocating hotel rooms at ASSA?

Consider the following alternative. Let's say that people request a room type and rank of hotels when registering (maybe top 5), then have rooms assigned at a later date (a few weeks after registration) based on that info. People would then have a short time to book the assigned room (maybe a week). Housing would be wide open after that point.  Would that be preferable to the current system? Al Roth has been answering questions here. He might have some ideas about the best way to solve this problem.

7 Answers

+7 votes
answered ago by (6.9k points)
selected ago by
Best answer
Both of the previous remarks are very sensible. (I stand corrected, Professor Startz:).
Of course it makes sense to consider not only whether the allocation of rooms can be improved, but also whether the resources used to allocate them can be reduced.  

It probably also makes sense to distinguish between the resources (time and effort) spent trying to secure rooms, and the distress felt by those who don't get good rooms.  It isn't clear how well a new allocation system would address the distress--there simply aren't enough rooms in the main conference hotel.  I don't know whether it would make sense for the AEA to be the decision maker, after collecting all the requests. Not everyone would be glad to have their professional organization play that role...(and having your room requests rejected after several weeks might be more or less stressful than finding out immediately that you should look for a satellite hotel or an Airbnb--which is sort of like having your paper desk rejected, instead of rejected after a long wait...).

user_4a7d5u suggests a tiered system, and that might also make sense, but I wonder how that would interact with the large strategy sets available to hotels and patrons who might wish to contact each other directly before their turn came.

In short, if the President and President-Elect of the AEA , Olivier and Ben, decide that this is an important issue, I'd recommend that they explore the issue with the AEA's  in-house experts on dealing with convention centers and hotels, to find out what our constraints are, and perhaps follow that with a membership survey to  better understand what the costs and benefits are of trying to centralize this marketplace.
+4 votes
answered ago by (730 points)
Also some priority for those needing rooms to interview job candidates might be welfare improving.
commented ago by (1.3k points)
And perhaps an additional priority boost for those who advertise through JOE.
commented ago by (700 points)
Many interviewing institutions don't manage to get suites to interview in, and end up using hotel rooms, which can be suboptimal for both interviewers and interviewees. Is this a capacity problem (too few suites in total) or an allocation problem (enough suites, but some of them are taken up by people who are not conducting interviews)? If the latter, perhaps the allocation mechanism should consider pre-reserving one suite per interviewing institution and then releasing if the institutions don't take them up.
+7 votes
answered ago by (6.9k points)
Allocating scarce resources is tough. Someone should study that...
And while I haven't studied the hotel room situation, here are some off the top of the head thoughts.

One way to allocate resources of course is by price: we could auction off the nicest and most convenient rooms to the highest bidders. We economists all know the good properties that mechanism has, and most of us, if we stop to think about it, know about some of the bad properties as well.  For better or worse, the AEA has concentrated on getting uniformly low room rates (which is not so hard to do when you are filling hotels the first weekend in January...)

So, how about a matching mechanism, in which prices don't do the heavy lifting of helping the market clear, but we ask people about their preferences for different kinds of rooms?

The potential efficiency gains from that kind of endeavor arise when people have heterogeneous preferences.  If most people have quite similar preferences (1st choice=main conference hotel, lesser choices ranked by distance from main conference hotel... with some variation for suites versus singles, etc.), then many incentive compatible matching mechanisms end up being equivalent to some sort of serial dictatorship. (Of course, the degree of heterogeneity of (cardinal) preferences is an empirical question, for which I have no data.)

So now we're talking about who should get to choose first.  And the system we have lets that be endogenous--the most desirable worms go to the early birds.
There could be better ways, but there aren't wonderful ways to allocate commonly-valued resources when you're reluctant to use prices...
commented ago by (1.3k points)
Unless those early birds use Chrome. Thanks for answering!
+2 votes
answered ago by (3.5k points)
Let me correct Professor Roth on one point. (For any noneconomist reading here, let me explain this is a joke. Prof. Roth is the all-time expert on these questions.)

One thing that makes this problem a little different from some other allocation problems is that under the current system significant resources are wasted in the application process. That's because there's a race to get in early. It's likely that the resource waste is greatest when preferences and abilities are homogeneous. I think that's what the suggestion made by the original poster was getting at.
+4 votes
answered ago by (290 points)
Just as a practical answer from someone who has some knowledge of how convention/conference packages look like. The
AEA's goal is probably create a socially optimal allocation, rather than privately optimal allocation.  My thought was the best way to do this is probably do staggered registration and price discrimination.

Have earlier registration for entities which could have 'group' registration and are seeking a large number of hotel rooms for purposes of hiring (this could be verified by a J.O.E listing) . I would also gear this towards offering the more expensive hotels to prevent an incentive for richer institutions simply also booking on behalf their other constituents (i.e. faculty not on search committees, graduate students ) .  This is simply earlier registration, and does not prevent institutions from registering it later.

then have a second round of registration for first time Job candidates.

Then third round of registration for everyone else.

The AEA is an unique conference in the sense that it requires both a lot of hotels in close vicinity, large conference space and a major airport (one likely to have many direct flights from most major cities in American and Ideally Europe). Few venues in the  country  have all three of these things.
+3 votes
answered ago by (3.3k points)
I'm pretty sure the best mechanism, is one that lets me convert my AEAsparkbucks into a preferred booking (either earlier, or too an upgraded suite).
0 votes
answered ago by (2.2k points)
We could consider moving all interviews out of hotel rooms of any type, even suites.  All interviews would take place at tables in the common space.